EXHIBIT 10.1
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PURCHASE AGREEMENT
by and between
ALLIANCE RESOURCES PLC
and
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
AND
ENERGY CAPITAL INVESTMENT COMPANY PLC
October 27, 1998
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TABLE OF CONTENTS
Page
PURCHASE AGREEMENT........................................................... 1
ARTICLE I - DEFINITIONS...................................................... 1
1.1 Certain Defined Terms........................................... 1
1.2 Certain Additional Defined Terms................................ 8
1.3 References and Construction..................................... 8
ARTICLE II - TERMS OF THE TRANSACTION........................................ 9
2.1 Agreement to Sell and to Purchase the Securities................ 9
2.2 Purchase Price and Payment...................................... 10
2.3 Placement Fee................................................... 10
ARTICLE III - CLOSING........................................................ 10
3.1 Closing......................................................... 10
3.2 Deliveries by the Company....................................... 10
3.3 Deliveries by Buyer............................................. 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER........................ 12
4.1 Corporate Organization.......................................... 12
4.2 Qualification................................................... 12
4.3 Charter and Bylaws.............................................. 12
4.4 Capitalization of the Company................................... 12
4.5 Authority Relative to This Agreement............................ 13
4.6 No Conflict..................................................... 13
4.7 Consents and Approvals, Licenses, Etc........................... 13
4.8 Subsidiaries.................................................... 13
4.9 Shares.......................................................... 14
4.10 Financial Statements............................................ 15
4.11 SEC Filings..................................................... 15
4.12 Absence of Undisclosed Liabilities.............................. 16
4.13 Absence of Certain Changes...................................... 16
4.14 Tax Matters..................................................... 16
4.15 Environmental and Other Laws.................................... 17
4.16 Legal Proceedings............................................... 18
4.17 Title to Properties; Permits; Licenses; Condition of Assets..... 18
4.18 ERISA........................................................... 19
4.19 Agreements...................................................... 21
4.20 Labor Disputes and Acts of God.................................. 22
4.21 Registration Rights............................................. 22
4.22 Offering of Securities.......................................... 23
4.23 Government Regulation........................................... 23
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4.24 Brokerage Fees.................................................. 23
4.25 Solvency........................................................ 23
4.26 Full Disclosure................................................. 23
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 24
5.1 Corporate Organization.......................................... 24
5.2 Authority Relative to This Agreement............................ 24
5.3 Investment Intent; Investment Experience;
Restricted Securities........................................... 24
5.4 Brokerage Fees.................................................. 25
ARTICLE VI - CONDUCT OF COMPANY PENDING CLOSING.............................. 25
6.1 Conduct and Preservation of Business............................ 25
6.2 Restrictions on Certain Actions................................. 25
6.3 Certain Action.................................................. 27
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF THE COMPANY....................... 27
7.1 Representations and Warranties True............................. 28
7.2 Covenants and Agreements Performed.............................. 28
7.3 HSR Act......................................................... 28
7.4 Legal Proceedings............................................... 28
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF BUYER............................ 28
8.1 Representations and Warranties True............................. 28
8.2 Covenants and Agreements Performed.............................. 29
8.3 HSR Act......................................................... 29
8.4 Legal Proceedings............................................... 29
8.5 Consents........................................................ 29
8.6 No Material Adverse Change...................................... 29
8.7 Senior Credit Facility.......................................... 29
8.8 Subordination Agreement......................................... 29
8.9 U.K. Opinion.................................................... 29
8.10 Closing of the Acquisitions and the Senior Credit Facility...... 30
ARTICLE IX - PRE-CLOSING TERMINATION......................................... 30
9.1 Termination..................................................... 30
9.2 Effect of Termination........................................... 30
ARTICLE X - AFFIRMATIVE COVENANTS OF THE COMPANY............................. 30
10.1 Payment and Performance......................................... 30
10.2 Books, Financial Statements and Reports......................... 31
10.3 Notice of Material Events and Change of Address................. 32
10.4 Maintenance of Properties....................................... 33
10.5 Maintenance of Existence and Qualifications..................... 33
10.6 Payment of Trade Liabilities, Taxes, etc........................ 33
10.7 Insurance....................................................... 33
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10.8 Compliance with Agreements and Law.............................. 33
10.9 Guaranties of Company's Subsidiaries............................ 33
ARTICLE XI - NEGATIVE COVENANTS OF THE COMPANY............................... 34
11.1 Indebtedness.................................................... 34
11.2 Limitation on Liens............................................. 34
11.3 Limitation on Mergers........................................... 34
11.4 Limitation on Sales of Property................................. 35
11.5 Limitation on Investments and New Businesses.................... 35
11.6 Transactions with Affiliates.................................... 35
11.7 Restricted Payments............................................. 35
11.8 Material Amendments............................................. 35
ARTICLE XII - PREPAYMENT OF THE NOTE......................................... 36
12.1 Optional Prepayment............................................. 36
ARTICLE XIII - EVENTS OF DEFAULT AND REMEDIES................................ 36
13.1 Events of Default............................................... 36
13.2 Remedies........................................................ 38
ARTICLE XIV - ADDITIONAL AGREEMENTS.......................................... 38
14.1 Third Party Consents............................................ 38
14.2 Access to Information........................................... 39
14.3 Listing of Shares............................................... 39
14.4 Use of Proceeds................................................. 39
14.5 Board Representation............................................ 39
14.6 Public Announcements............................................ 39
14.7 Fees and Expenses............................................... 40
14.8 Costs of Enforcement............................................ 40
14.9 Transfer Taxes.................................................. 40
14.10 Indemnification................................................. 40
ARTICLE XV - MISCELLANEOUS................................................... 40
15.1 Notices......................................................... 40
15.2 Waiver and Amendment............................................ 42
15.3 Survival........................................................ 42
15.4 Entire Agreement................................................ 42
15.5 Binding Effect; Assignment; No Third Party Benefit.............. 42
15.6 Severability.................................................... 42
15.7 GOVERNING LAW................................................... 43
15.8 Remedies Not Exclusive.......................................... 43
15.9 Further Assurances.............................................. 43
15.10 Counterparts.................................................... 43
15.11 Injunctive Relief............................................... 43
15.12 Consent to Jurisdiction......................................... 43
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15.13 Payments........................................................ 44
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PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement"), dated as of October 27, 1998,
between Alliance Resources PLC, a public limited company organized under the
laws of England and Wales (the "Company"), and EnCap Equity 1996 Limited
Partnership, a Texas limited partnership ("EnCap LP"), and Energy Capital
Investment Company PLC, an English investment company ("ECIC") (with EnCap LP
and ECIC sometimes being herein collectively called "Buyer").
WHEREAS, the Company desires to issue and sell to Buyer, and Buyer desires
to purchase from the Company, (i) $9,750,000 aggregate principal amount of its
10% Subordinated Notes due 2005 (the "Notes") and (ii) 15,000,000 ordinary
shares of 1p each of the Company (the "Shares") (the Notes and the Shares are
referred to herein collectively as the "Securities");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"Acquisitions" means the acquisition by the Company of all of the
issued and outstanding shares of the capital stock of Difco Limited and the
acquisition by Difco Limited of certain oil and gas interests in the East
Irish Sea from Burlington Resources Limited (Irish Sea), each as described
in the Listing Particulars.
"affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls,
is controlled by or is under common control with, such Person. For the
purposes of this definition, "control" when used with respect to any Person
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Alliance Group" means Alliance Resources Group, Inc., a Delaware
corporation.
"Alliance USA" means Alliance Resources (USA), Inc., a Delaware
corporation.
"Ancillary Documents" means each agreement, certificate,
document, commitment and writing (other than this Agreement) executed or to
be executed by the Company or Buyer
in connection with the transactions contemplated herein or therein,
including without limitation the Notes, the Subsidiary Guarantees and the
Registration Rights Agreement.
"Applicable Law" means any statute, law, rule or regulation, or
any judgment, order, writ, injunction or decree of, any Governmental Entity
to which a specified Person or property is subject.
"ARCOL" means ARCOL Inc., a Delaware corporation.
"ARNO" means ARNO Inc., a Delaware corporation.
"Burlington Agreement" means that certain Sale and Purchase
Agreement East Irish Sea dated June 29, 1998 by and between Difco Limited
and Burlington Resources (Irish Sea) Limited, as amended by letter
agreement dated October 5, 1998.
"Change of Control" means the occurrence of any of the following
events: (a) any Person or two or more Persons, other than Buyer or any
affiliate of Buyer, acting as a group shall acquire beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Exchange Act, and including holding proxies to vote for the
election of directors other than proxies held by the Company's management
or their designees to be voted in favor of persons nominated by the
Company's Board of Directors) of 33% or more of the outstanding voting
securities of the Company, measured by voting power (including both
ordinary shares and any preferred stock or other equity securities
entitling the holders thereof to vote with the holders of common stock in
elections for directors of the Company), exclusive of the issuance of
ordinary shares contemplated under this Agreement, (b) the Company shall
fail beneficially to own 100% of the outstanding shares of voting capital
stock of Alliance Group, Manx, LRI or Difco on a fully-diluted basis, (c)
LRI shall fail beneficially to own 100% of the outstanding shares of the
voting capital stock of LPC, GOCA, New GOC or Enpro, on a fully-diluted
basis, (d) Alliance Group shall fail beneficially to own 100% of the
outstanding shares of the voting capital stock of Source, ARNO, ARCOL or
Alliance USA, (e) one-third or more of the directors of the Company shall
consist of persons not nominated by the Company's Board of Directors (not
including as Board nominees any directors which the Board is obligated to
nominate pursuant to shareholders agreements, voting trust arrangements or
similar arrangements) or (f) within three years of the Closing Date, the
employment by the Company of John Keenan or Paul Fenemore terminates for
any reason.
"Companies Act" means the Companies Act 1985 as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Default" shall mean an Event of Default and any default, event
or condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of Default.
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"Difco" means Difco Limited, a private limited company
incorporated under the laws of England and Wales
"Difco Agreement" means that certain Amended and Restated Sale
and Purchase Agreement dated September 23, 1998, by and between the Company
and the shareholders of Difco Limited.
"Enpro" means ENPRO, INC., a Texas corporation.
"Environmental Laws" means any and all laws relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.
"Fiscal Quarter" shall mean a three-month period ending on July
31, October 31, January 31 or April 30 of any year.
"Fiscal Year" shall mean the twelve-month period ending on April
30 of any year.
"GOCA" means LaTex/GOC Acquisition, Inc., a Delaware corporation.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any federal, state, municipal or
other governmental body, agency, authority, department, commission, board,
bureau or instrumentality (domestic or foreign).
"Hazardous Materials" means any substance regulated under
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Indebtedness" of any Person means Liabilities in any of the
following categories: (a) Liabilities for borrowed money; (b) Liabilities
constituting an obligation to pay the deferred purchase price of property
or services; (c) Liabilities evidenced by a bond, debenture, note or
similar instrument; (d) Liabilities which would under U.S. GAAP be shown on
such Person's balance sheet as a liability, and is payable more than one
year from the date of creation thereof (other than reserves for taxes and
reserves for contingent obligations); (e) Liabilities arising under futures
contracts, forward contracts, swap, cap or collar contracts,
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option contracts, hedging contracts, other derivative contracts, or similar
agreements; (f) Liabilities constituting principal under leases capitalized
in accordance with U.S. GAAP; (g) Liabilities arising under conditional
sales or other title retention agreements; (h) Liabilities owing under
direct or indirect guaranties of Liabilities of any other Person or
constituting obligations to purchase or acquire or to otherwise protect or
insure a creditor against loss in respect of Liabilities of any other
Person (such as obligations under working capital maintenance agreements,
agreements to keep-well, or agreements to purchase Liabilities, assets,
goods, securities or services), but excluding endorsements in the ordinary
course of business of negotiable instruments in the course of collection;
(i) Liabilities (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Liabilities
arises out of or in connection with the sale of the same or similar
securities or property; (j) Liabilities with respect to letters of credit
or applications or reimbursement agreements therefor; (k) Liabilities with
respect to payments received in consideration of oil, gas, or other
minerals yet to be acquired or produced at the time of payment (including
obligations under "take-or-pay" contracts to deliver gas in return for
payments already received and the undischarged balance of any production
payment created by such Person or for the creation of which such Person
directly or indirectly received payment); or (l) Liabilities with respect
to other obligations to deliver goods or services in consideration of
advance payments therefor; provided, however, that the "Indebtedness" of
any Person shall not include Liabilities that were incurred by such Person
on ordinary trade terms to vendors, suppliers, or other Persons providing
goods and services for use by such Person in the ordinary course of its
business, unless and until such Liabilities are outstanding more than 90
days past the original invoice or billing date therefor.
"IRS" means the Internal Revenue Service.
"Key Employment Agreements" means (i) that certain Executive
Service Agreement dated October 5, 1996 between the Company and John A.
Keenan, as amended by Supplemental Agreement dated October 15, 1996, (ii)
that certain Service Agreement dated September 20, 1996 between the Company
and Paul Raymond Fenemore, as amended by Supplemental Agreement dated
September 20, 1996 and (iii) that certain Executive Service Agreement dated
December 16, 1996 between the Company and Harry Brian Kerr Williams.
"Liabilities" shall mean, as to any Person, all indebtedness,
liabilities and obligations of such Person, whether matured or unmatured,
liquidated or unliquidated, primary or secondary, direct or absolute, fixed
or contingent, and whether or not required to be considered pursuant to
U.S. GAAP.
"Lien" shall mean, with respect to any property or assets, any
right or interest therein of a creditor to secure Liabilities owed to such
creditor or any other arrangement with such creditor which provides for the
payment of such Liabilities out of such property or assets or which allows
him to have such Liabilities satisfied out of such property or assets prior
to the general creditors of any owner thereof, including any lien,
mortgage, security interest, pledge, deposit, production payment, rights of
a vendor under any title retention or conditional sale agreement or lease
substantially equivalent thereto, tax lien, mechanic's or materialman's
lien,
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or any other charge or encumbrance for security purposes, whether arising
by law or agreement or otherwise, but excluding any right of offset which
arises without agreement in the ordinary course of business. "Lien" shall
also mean any filed financing statement, any registration of a pledge (such
as with an issuer of uncertificated securities), or any other arrangement
or action which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Listing Particulars" means the Company's circular to
shareholders dated June 30, 1998, as supplemented by the Company's
supplementary listing particulars dated October 7, 1998.
"Listing Rules" means the listing rules of the London Stock
Exchange.
"London Stock Exchange" means the London Stock Exchange Limited.
"LPC" means LaTex Petroleum Corporation, an Oklahoma corporation.
"LRI" means LaTex Resources, Inc., a Delaware corporation.
"LRI Merger" means the merger of Alliance Resources (Delaware)
Inc. with and into LRI whereby the Company became the sole shareholder of
LRI.
"Majority of the Noteholders" means those holder(s) of Notes who
hold a majority in aggregate principal amount of the Notes at the time
outstanding, exclusive of any Notes held by the Company or any Subsidiary.
"Manx" means Manx Petroleum Plc, a company incorporated under the
laws of England and Wales.
"Material Adverse Effect" means a material adverse change in, or
a material adverse effect upon (i) the business, assets, results of
operations, condition (financial or otherwise) or prospects of the Company
and its Subsidiaries on a consolidated basis, (ii) the Company's or any
Subsidiary Guarantor's ability to timely pay the Obligations or to perform
on a timely basis any material obligation of the Company under this
Agreement or any agreement, instrument, or document entered into or
delivered in connection herewith or (iii) the enforceability of the
material terms of this Agreement or any Ancillary Document.
"New GOC" means Germany Oil Company, a Delaware corporation
formerly know as LRI Acquisition, Inc.
"Obligations" means all Liabilities owing Buyer or, if different,
the holder of the Notes, pursuant to the this Agreement, the Notes or any
of the other Ancillary Documents.
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"Old LaTex Payables" means those current accounts payable of the
Company or its consolidated Subsidiaries that meet one or more of the
following tests and have been certified to Buyer by the Company and
applicable Subsidiary as being an Old LaTex Payable:
(a) accounts payable the collection of which is barred by
the applicable statute of limitations;
(b) accounts payable the collection of which has been
compromised or forgiven in part, in either case to the extent of
the amount that has been compromised or forgiven; or
(c) accounts payable in respect of which the indebtedness
was incurred prior to the LRI Merger and where each of the
following is true: (i) no payment has been made on an individual
amount of indebtedness payable since the LRI Merger, (ii) no
contact has been received by the Company or applicable Subsidiary
from the applicable creditor since the LRI Merger pertaining to
such account or if contact has been received, such account is
being diligently contested in good faith, (iii) no promise to pay
such account has been made by the Company or applicable
Subsidiary since the LRI Merger and (iv) no judgment has been
obtained by, or settlement agreement entered into with, such
creditor with respect to such indebtedness.
"Ordinary Shares" means ordinary shares of 1p each of the Company
and any securities issued or issuable with respect to such shares by way of
a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization.
"Permits" means licenses, permits, franchises, consents,
approvals, variances, exemptions and other authorizations of or from
Governmental Entities.
"Permitted Investment" means any investment, loan, advance,
guaranty or capital contribution by the Company or any Subsidiary in any of
the following: (a) properties or assets to be used in the ordinary course
of business of the Company and its Subsidiaries; (b) current assets arising
from the sale of goods and services in the ordinary course of business of
the Company and its Subsidiaries; (c) investments in one or more of the
Company's Subsidiaries or in any Person that concurrently with such
investment becomes a Subsidiary; (d) any marketable obligation maturing not
later than one year after the date of acquisition therefor, issued or
guaranteed by the United States of America or by any agency of the United
States of America which has the full faith and credit of the United States
of America; (e) commercial paper which is given the highest rating by a
credit rating agency of recognized national standing and maturing not more
than 270 days from the date of creation thereof; and (f) any demand deposit
or time deposit (including certificates of deposit and money market or
sweep accounts) with a commercial bank or trust company organized and doing
business under the laws of the United States of America or any state
thereof which has capital, surplus and undivided profits of at least
$250,000,000, provided that such deposit must be either
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payable on demand or mature not more than twelve months from the date of
investment therein.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental
Entity.
"reasonable best efforts" means a party's reasonable best efforts
in accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Restricted Payment" shall mean any Distribution (as defined
below) in respect of the Company or any Subsidiary thereof (other than on
account of capital stock or other equity interests of a Subsidiary owned
legally or beneficially by the Company or another Subsidiary), including
any Distribution resulting in the acquisition by the Company of securities
that would constitute treasury stock. As used in this definition,
"Distribution" shall mean, in respect of any corporation, partnership or
other business entity (a) dividends or other distributions or payments on
capital stock or other equity interest of such corporation, partnership or
other business entity (except distributions in such stock or other equity
interest) and (b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase such
stock or other equity interests (except when solely in exchange for such
stock or other equity interests).
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Securities and Exchange Commission" means the U.S. Securities
and Exchange Commission.
"Senior Credit Facility" means that certain Third Amended and
Restated Credit Agreement dated even date herewith by and among the
Company, Alliance USA, GOCA, LPC, New GOC and Source and Bank of America
National Trust and Savings Association.
"Shareholder Approval" means the receipt of the requisite number
of votes of the shareholders of the Company at a duly convened
extraordinary general meeting of the Company to approve each of the five
resolutions proposed in the Notice of Extraordinary General Meeting dated
October 7, 1998 and contained in the Listing Particulars.
"Source" means Source Petroleum, Inc., a Louisiana corporation.
"Subsidiary" means any corporation more than 50% of whose
outstanding voting securities, or any general partnership, joint venture or
similar entity more than 50% of whose total equity interests, is owned,
directly or indirectly, by the Company, or any limited partnership of which
the Company or any Subsidiary is a general partner.
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"Subsidiary Guarantors" means Difco, Alliance Group, Alliance
USA, Source, LRI, LPC, GOCA, New GOC and Enpro.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise, transfer, stamp,
withholding or other tax imposed by any United States federal, state or
local (or any foreign or provincial) taxing authority, including any
interest, penalties or additions attributable thereto.
"Tax Return" means any return or report (including but not
limited to any related or supporting information, any amended return or
report or any information return or report) with respect to Taxes.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United States.
"U.S. GAAP" means generally accepted accounting principles in the
United States of America from time to time.
1.2 Certain Additional Defined Terms. In addition to such terms as
are defined in the opening paragraph of and the recitals to this Agreement and
in Section 1.1, the following terms are used in this Agreement as defined in the
Sections set forth opposite such terms:
Defined Term Section Reference
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agreements....................................... 4.19
Audited Financial Statements..................... 4.10
Closing.......................................... 3.1
Closing Date..................................... 3.1
Event of Default................................. 13.1
Latest Balance Sheet............................. 4.10
Notes............................................ preamble
Organic Documents................................ 4.3
Permitted Liens.................................. 11.2
Placement Fee Shares............................. 2.3
Purchase Price................................... 2.2
Registration Rights Agreement.................... 3.2(c)
SEC Filings...................................... 4.11
Shares........................................... preamble
Securities....................................... preamble
Subsidiary Guarantees............................ 3.2(c)
Unaudited Financials............................. 4.10
1.3 References and Construction.
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(a) All references in this Agreement to articles, sections,
subsections and other subdivisions refer to corresponding articles, sections,
subsections and other subdivisions of this Agreement unless expressly provided
otherwise.
(b) Titles appearing at the beginning of any of such subdivisions are
for convenience only and shall not constitute part of such subdivisions and
shall be disregarded in construing the language contained in such subdivisions.
(c) The words "this Agreement", "this instrument", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited.
(d) Words in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires. Pronouns in
masculine, feminine and neuter genders shall be construed to include any other
gender.
(e) Unless the context otherwise requires or unless otherwise
provided herein, the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments or restatements of such agreement,
instrument or document, provided that nothing contained in this subsection shall
be construed to authorize such renewal, extension, modification, amendment or
restatement.
(f) Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
(g) The word "includes" and its derivatives means "includes, but is
not limited to" and corresponding derivative expressions.
(h) No consideration shall be given to the fact or presumption that
one party had a greater or lesser hand in drafting this Agreement.
(i) Unless otherwise indicated, all references herein to "$" or
"dollars" shall refer to U.S. Dollars.
ARTICLE II
TERMS OF THE TRANSACTION
2.1 Agreement to Sell and to Purchase the Securities. At the Closing,
and on the terms and subject to the conditions set forth in this Agreement, the
Company shall issue, allot, sell and deliver to EnCap LP and ECIC, and EnCap LP
and ECIC shall subscribe for, purchase and accept from the Company, the
Securities set forth opposite such Buyer's name below:
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EnCap LP (1) $7,312,500 principal amount
$7,500,000 of Notes; and
(2) 11,250,000 Ordinary Shares
ECIC (1) $2,437,500 principal amount
$2,500,000 of Notes; and
(2) 3,750,000 Ordinary Shares
2.2 Purchase Price and Payment. EnCap LP and ECIC, respectively,
shall pay to the Company at the Closing the aggregate amount set forth below
such Buyer's name in Section 2.1 (collectively, the "Purchase Price"). The
Purchase Price shall be allocated $250,000 to the Shares and $9,750,000 to the
Notes for all purposes, including the filing of any Tax Returns.
2.3 Placement Fee. At the Closing, the Company shall pay EnCap
Investments L.C. a placement fee, consisting of 545,454 ordinary shares of the
Company (the "Placement Fee Shares").
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place (i) at the offices of Thompson & Knight, P.C., 1700
Chase Tower, 600 Travis, Houston, Texas, at 10 a.m., local time, on October 30,
1998, or at such other time or place or on such other date as the parties hereto
shall agree. The date on which the Closing is required to take place is herein
referred to as the "Closing Date." All Closing transactions shall be deemed to
have occurred simultaneously.
3.2 Deliveries by the Company. At the Closing, the Company will
deliver the following documents to Buyer:
(a) A certificate executed on behalf of the Company by an authorized
signatory of the Company, dated the Closing Date, representing and certifying,
in such detail as Buyer may reasonably request, that the conditions set forth in
Sections 8.1 and 8.2 have been fulfilled.
(b) Opinions of counsel, in form, scope and content reasonably
acceptable to Buyer, of Jenkens & Gilchrist, U.S. counsel to the Company, and
Ashurst Morris & Crisp, U.K. counsel to the Company, dated the Closing Date,
covering the matters set forth on Exhibit 3.2(b) and such other matters as Buyer
may reasonably request.
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(c) The certificates, instruments and documents listed below:
(i) Share certificates in definitive form representing the
Shares and the Placement Fee Shares, registered in the name of the
applicable Person and duly executed by the Company.
(ii) The Notes, substantially in the form of Exhibit 3.2(c)(ii)
in all material respects, duly executed by the Company.
(iii) Subsidiary guarantees substantially in the form of Exhibit
3.2(c)(iii) in all material respects (the "Subsidiary Guarantees") of each
of the Subsidiary Guarantors, duly executed by the Subsidiary Guarantors.
(iv) A counterpart of a registration rights agreement
substantially in the form of Exhibit 3.2(c)(iv) in all material respects
(the "Registration Rights Agreement"), duly executed by the Company.
(v) Certified copy of a written consent or resolutions of the
Board of Directors of the Company and the Subsidiary Guarantors authorizing
the execution, delivery and performance by the Company and the Subsidiary
Guarantors of this Agreement and the Ancillary Documents, as necessary.
(vi) Certificates of existence and, for non-U.K. entities, good
standing with respect to the Company and the Subsidiary Guarantors, dated
within a number of days prior to the Closing Date reasonably acceptable to
Buyer.
(vii) Such other certificates, instruments, and documents as may
be reasonably requested by Buyer prior to the Closing Date to carry out the
intent and purposes of this Agreement.
3.3 Deliveries by Buyer. At the Closing, each Buyer will deliver the
following to the Company:
(a) A certificate executed by an authorized signatory of such Buyer,
dated the Closing Date, representing and certifying, in such detail as the
Company may reasonably request, that the conditions set forth in Sections 7.1
and 7.2 have been fulfilled.
(b) The portion of the Purchase Price indicated for such Buyer in
Section 2.1, in immediately available funds by a confirmed wire transfer to a
bank account designated in writing by the Company to Buyer no later than two
business days prior to the Closing Date.
(d) The certificates, instruments and documents listed below:
(i) A counterpart of the Registration Rights Agreement, duly
executed by such Buyer.
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(ii) Such other certificates, instruments, and documents as may
be reasonably requested by the Company prior to the Closing Date to carry
out the intent and purposes of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Company represents and warrants to Buyer that:
4.1 Corporate Organization. The Company is a public limited company
duly organized and validly existing under the laws of England and Wales.
4.2 Qualification. Each of the Company and the Subsidiaries is duly
qualified or licensed to do business and, with respect to non-U.K. entities, in
good standing in each of the jurisdictions in which it owns, leases or operates
property or in which such qualification or licensing is required for the conduct
of its business.
4.3 Charter and Bylaws. The Company has made available to Buyer
accurate and complete copies of the Company's certificate of incorporation,
bylaws, memorandum and articles of association or equivalent organizational
documents ("Organic Documents") as currently in effect, and stock records of the
Company. Neither the Company nor any Subsidiary is in violation of its Organic
Documents or its partnership agreement or similar governing document, as the
case may be.
4.4 Capitalization of the Company. The authorized capital stock of
the Company, the number of shares outstanding and the number of shares held in
the Company's treasury are set forth on Schedule 4.4 hereto. All outstanding
shares of capital stock of the Company have been validly issued and are fully
paid and nonassessable, and no shares of capital stock of the Company are
subject to, nor have any been issued in violation of, preemptive or similar
rights. Except as set forth on Schedule 4.4 hereto, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of the Company convertible
into or exchangeable for shares of capital stock or other voting securities of
the Company, (iii) no options or other rights to acquire from the Company, and
no obligation of the Company to issue or sell, any shares of capital stock or
other voting securities of the Company or any securities of the Company
convertible into or exchangeable for such capital stock or voting securities,
and (iv) no equity equivalents, interests in the ownership or earnings or other
similar rights of or with respect to the Company. There are (and as of the
Closing Date there will be) no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem, or otherwise acquire any of the foregoing
shares, securities, options, equity equivalents, interests, or rights. Except as
set forth on Schedule 4.4, the Company is not a party to, and is not aware of,
any voting agreement, voting trust, or similar agreement or arrangement relating
to any class or series of its capital stock.
4.5 Authority Relative to This Agreement. The Company has full power
and authority to execute, deliver, and, upon Shareholder Approval, perform this
Agreement and the Ancillary
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Documents, including the Notes, to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and (upon
Shareholder Approval) performance by the Company of this Agreement and the
Ancillary Documents, including the Notes, to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary action of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes, and each
Ancillary Document, including the Notes, executed or to be executed by the
Company has been, or when executed will be, duly executed and delivered by the
Company and constitutes, or when executed and delivered will constitute, a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with their respective terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
4.6 No Conflict. Assuming all consents, approvals, authorizations and
other actions described in Section 4.7 have been obtained and all filings and
notifications listed on Schedule 4.7 have been made, and except as described on
Schedule 4.6 and for Shareholder Approval, the execution, delivery and
performance of this Agreement by the Company, the execution, delivery and
performance by each Subsidiary of the Ancillary Documents to which it is a
party, and the consummation by them of the transactions contemplated hereby and
thereby do not and will not (a) violate or conflict with the Organic Documents
of the Company or any Subsidiary, (b) conflict with or result in any violation
of any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization or waiver of, or notice to, any party to, any bond, debenture,
note, mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any of their respective properties may be bound or
any Permit held by the Company or any Subsidiary, (iii) result in the creation
or imposition of any Lien upon the properties of the Company or any Subsidiary
(other than as provided in the Senior Credit Facility) or (iv) violate any
Applicable Law binding upon the Company or any Subsidiary.
4.7 Consents and Approvals, Licenses, Etc. Except for Shareholder
Approval and as set forth on Schedule 4.7, no consent, approval, authorization,
license, order or permit of, or declaration, filing or registration with, or
notification to, any Governmental Entity, or any other Person or entity, is
required to be made or obtained by the Company or any Subsidiary in connection
with the execution, delivery and performance of this Agreement or any Ancillary
Document and the consummation of the transactions contemplated hereby and
thereby.
4.8 Subsidiaries
(a) The Company does not own, directly or indirectly, any capital
stock or equity securities of any corporation or have any direct or indirect
equity or ownership interest in any other Person, other than the Subsidiaries.
Schedule 4.8 lists each Subsidiary, the jurisdiction of incorporation or
formation of each Subsidiary and the authorized (in the case of capital stock)
and
-13-
outstanding capital stock or other equity interests of each Subsidiary. Each
U.K. Subsidiary is a duly formed and validly existing under the laws of the
jurisdiction of its formation, and each other Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary has all requisite corporate
or other, as applicable, power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted. No actions or
proceedings to dissolve any Subsidiary are pending.
(b) Except as otherwise indicated on Schedule 4.8, all the
outstanding capital stock or other equity interests of each Subsidiary are owned
directly or indirectly by the Company, free and clear of all Liens. All
outstanding shares of capital stock of each corporate Subsidiary have been
validly issued and are fully paid and nonassessable. All equity interests of
each other Subsidiary have been validly issued and are fully paid (to the extent
required at such time). No shares of capital stock or other equity interests of
any Subsidiary are subject to, nor have any been issued in violation of,
preemptive or similar rights.
(c) Except as set forth on Schedule 4.8, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or other
voting securities of any Subsidiary, (ii) no securities of the Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or other
voting securities of any Subsidiary, (iii) no options or other rights to acquire
from the Company or any Subsidiary, and no obligation of the Company or any
Subsidiary to issue or sell, any shares of capital stock or other voting
securities of any Subsidiary or any securities convertible into or exchangeable
for such capital stock or voting securities and (iv) no equity equivalents,
interests in the ownership or earnings, or other similar rights of or with
respect to any Subsidiary. There are (and as of the Closing Date there will be)
no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any of the foregoing shares, securities, options,
equity equivalents, interests or rights.
(d) Each of the Subsidiary Guarantors has full power and authority to
execute, deliver, and, upon Shareholder Approval, perform the Subsidiary
Guarantee and other Ancillary Documents to which it is a party and to consummate
the transactions contemplated thereby. The execution, delivery, and (upon
Shareholder Approval) performance by each of the Subsidiary Guarantors of the
Subsidiary Guarantee and other Ancillary Documents to which it is a party, and
the consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary action of such Subsidiary Guarantor. The Subsidiary
Guarantees and each Ancillary Document executed or to be executed by the
Subsidiary Guarantors has been, or when executed will be, duly executed and
delivered by the Subsidiary Guarantors and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of the
Subsidiary Guarantors, enforceable against the Subsidiary Guarantors in
accordance with their respective terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
4.9 Shares. Upon Shareholder Approval, the Shares and the Placement
Fee Shares to be issued by the Company at the Closing will have been duly
authorized for such issuance and, when issued and delivered by the Company in
accordance with the provisions of this Agreement, will be
-14-
validly issued, fully paid, and nonassessable. The issuance of the Shares and
the Placement Fee Shares under this Agreement is not subject to any preemptive
or similar rights. Upon fulfillment of the Company's obligations under Section
14.3 hereto and assuming compliance by Buyer with all applicable requirements of
Regulation S under the Exchange Act, the Shares and Placement Fee Shares will be
tradable on the London Stock Exchange.
4.10 Financial Statements. The Company has delivered to Buyer
accurate and complete copies of (i) the Company's audited consolidated balance
sheet as of April 30, 1998, and the related audited consolidated statements of
income, stockholders' equity and cash flows for the year then ended, and the
notes and schedules thereto, together with the unqualified report thereon of
KPMG Audit Plc, independent public accountants (the "Audited Financial
Statements") and (ii) the Company's unaudited consolidated balance sheet as of
July 31, 1998 (the "Latest Balance Sheet"), and the related unaudited
consolidated statements of income, stockholders' equity, and cash flows for the
three-month period then ended (the "Unaudited Financial Statements"), certified
by the Company's chief financial officer (collectively, the "Financial
Statements"). The Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and records of the Company
and its consolidated Subsidiaries in conformity with U.S. GAAP accounting
principles applied on a basis consistent with preceding years throughout the
periods involved and (iii) fairly present the Company's consolidated financial
position as of the respective dates thereof and its consolidated results of
operations and cash flows for the periods then ended. The statements of income
included in the Financial Statements do not contain any items of special or
nonrecurring income except as identified in the notes thereto, and the balance
sheets included in the Financial Statements do not reflect any write-up or
revaluation increasing the book value of any assets, nor have there been any
transactions since the date of the Latest Balance Sheet giving rise to special
or nonrecurring income or any such write-up or revaluation.
4.11 SEC Filings. The Company has filed with the Securities and
Exchange Commission, the London Stock Exchange and the Registrar of Companies
all forms, reports, schedules, statements and other documents required to be
filed by it since May 1, 1996 under the Companies Act and the Listing Rules and
since April 30, 1997 under the Securities Act, the Exchange Act and all other
federal securities laws. All final forms, reports, schedules, statements and
other documents (including all amendments thereto) filed by the Company with the
Securities and Exchange Commission and the London Stock Exchange since such date
are herein collectively referred to as the "SEC Filings". The Company has
delivered to Buyer accurate and complete copies of all the SEC Filings in the
form filed by the Company with the Securities and Exchange Commission and the
London Stock Exchange. The SEC Filings, at the time filed, complied in all
material respects with all applicable requirements of federal securities laws.
None of the SEC Filings, including, without limitation, any financial statements
or schedules included therein, at the time filed, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. All material
contracts of the Company and the Subsidiaries have been included in the SEC
Filings, except for those contracts not required to be filed pursuant to the
rules and regulations of the Securities and Exchange Commission and the London
Stock Exchange. The Company shall deliver to Buyer as soon as they become
available accurate and complete copies of all forms, reports, and other
documents furnished by it to its shareholders generally or filed by it with the
Securities and
-15-
Exchange Commission and the London Stock Exchange subsequent to the date hereof
and prior to the Closing Date.
4.12 Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liability or obligation (whether accrued, absolute,
contingent, unliquidated, or otherwise, whether or not known to the Company or
any Subsidiary, and whether due or to become due), except (i) liabilities
reflected on the Latest Balance Sheet, (ii) liabilities which have arisen since
the date of the Latest Balance Sheet in the ordinary course of business (none of
which is a material liability for breach of contract, breach of warranty, tort,
or infringement), (iii) liabilities arising under executory contracts entered
into in the ordinary course of business (none of which is a material liability
for breach of contract) and (iv) liabilities specifically set forth on Schedule
4.12.
4.13 Absence of Certain Changes. Except as disclosed on Schedule
4.13, since the date of the Latest Balance Sheet, (i) there has not been any
material adverse change in, or any event or condition that might reasonably be
expected to result in a material adverse change in, the business assets, results
of operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries considered as a whole; (ii) the businesses of the Company
and the Subsidiaries have been conducted only in the ordinary course consistent
with past practice; (iii) neither the Company nor any Subsidiary has incurred
any material liability, engaged in any material transaction or entered into any
material agreement outside the ordinary course of business consistent with past
practice; (iv) neither the Company nor any Subsidiary has suffered any material
loss, damage, destruction, or other casualty to any of its assets (whether or
not covered by insurance); and (v) neither the Company nor any Subsidiary has
taken any of the actions set forth in Section 6.2 except as permitted
thereunder.
4.14 Tax Matters. Except as disclosed on Schedule 4.14:
(a) The Company and each Subsidiary has filed, or has had filed on
its behalf, in a timely manner (within any applicable extension periods) with
the appropriate taxing authority all Tax Returns with respect to Taxes of the
Company and of each of the Subsidiaries, all of which Tax Returns are true,
correct and complete in all material respects;
(b) All Taxes due and payable (whether or not reflected in Tax
Returns as filed) with respect to all taxable periods of the Company and the
Subsidiaries have been paid in full or adequate reserves have been provided for
on the Financial Statements;
(c) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to the Company or any of the Subsidiaries;
(d) None of the Tax Returns of or with respect to the Company or any
of the Subsidiaries is currently being audited or examined by any taxing
authority;
(e) No material deficiency for any Taxes has been assessed with
respect the Company or to any of the Subsidiaries that has not either (i) been
abated or (ii) paid in full or for which adequate reserves have been provided;
-16-
(f) No Tax litigation is currently pending;
(g) No waiver or extension of any statute of limitations to any
federal, state, local or foreign Tax matter has been given by or requested from
the Company or any Subsidiary; and
(h) Neither the Company nor any Subsidiary has filed a consent under
Section 341(f) of the Code.
(i) The Company and the Subsidiaries have complied with all
Applicable Laws relating to the withholding of Taxes and the payment thereof
(including, without limitation, withholding of Taxes under Sections 1441 and
1442 of the Code, or similar provisions under foreign laws), and has timely and
properly withheld from the appropriate party and paid over to the proper
Governmental Entity all amounts required to be withheld and be paid over under
Applicable Law.
(j) Neither the Company nor any Subsidiary is required to include in
income any adjustment under Section 481(a) of the Code by reason of a change in
accounting method, and neither the Company nor any Subsidiary, nor the Internal
Revenue Service, has proposed any such adjustment or change in accounting
method. The Company and the Subsidiaries do not have pending any private letter
ruling with the IRS.
(k) Other than as a result of this transaction, none of the Company's
or any Subsidiary's tax attributes is subject to the limitations of Section 382,
383 or 384 of the Code or Temporary Treasury Regulation Sections 1.1502-15T or
1.1502-21T(c).
(l) There are no liens for Taxes upon any assets of the Company or
any Subsidiary, except liens for Taxes not yet due and payable.
(m) The tax basis of each of the assets of the Company and the
Subsidiaries as set forth on the books, accounts and records of the Company and
the Subsidiaries is true, correct and complete in all material respects.
4.15 Environmental and Other Laws. Except as disclosed on Schedule
4.15 or in the SEC Filings filed prior to the date hereof, (a) the Company and
the Subsidiaries are conducting their businesses in compliance in all material
respects with all Applicable Laws, including all Environmental Laws, and are in
material compliance with all licenses and permits required under any such laws;
(b) to the best of the Company's knowledge, none of the operations or properties
of the Company or any Subsidiary is the subject of foreign, federal, state or
local investigation evaluating whether any material remedial action is needed to
respond to a release of any Hazardous Materials into the environment or to the
improper storage or disposal (including storage or disposal at offsite
locations) of any Hazardous Materials; (c) neither the Company nor any
Subsidiary has filed any notice under any Applicable Law indicating that it is
responsible for the improper release into the environment, or the improper
storage or disposal, of any material amount of any Hazardous Materials or that
any Hazardous Materials have been improperly released, or are improperly stored
or disposed of, upon any property of the Company or any Subsidiary; (d) neither
the Company nor any Subsidiary has transported or arranged for the
transportation of any Hazardous Material to any location which is (i)
-17-
listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, listed for
possible inclusion on such National Priorities List by the Environmental
Protection Agency in its Comprehensive Environmental Response, Compensation and
Liability Information System List, or listed on any similar state list or
foreign jurisdiction list or (ii) the subject of foreign, federal, state or
local enforcement actions or other investigations which may lead to material
claims against the Company or any Subsidiary for clean-up costs, remedial work,
damages to natural resources or for personal injury claims (whether under
Environmental Laws or otherwise); and (e) to the best of the Company's
knowledge, neither the Company or any Subsidiary has any material contingent
liability under any Environmental Laws or in connection with the release into
the environment, or the storage or disposal, of any Hazardous Materials.
4.16 Legal Proceedings. Except as disclosed on Schedule 4.16, there
are no Proceedings pending or, to the best knowledge of the Company, threatened
against or involving the Company or any Subsidiary (or any of their respective
directors or officers in connection with the business or affairs of the Company
or any Subsidiary) or any properties or rights of the Company or any Subsidiary
which, individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is subject to
any judgment, order, writ, injunction, or decree of any Governmental Entity
which has had or is reasonably likely to have a Material Adverse Effect. There
are no Proceedings pending or, to the best knowledge of the Company, threatened
seeking to restrain, prohibit, or obtain damages or other relief in connection
with, or questioning the legality or validity of, this Agreement or any
Ancillary Document or the transactions contemplated hereby or thereby.
4.17 Title to Properties; Permits; Licenses; Condition of Assets.
(a) Each of the Company and the Subsidiaries has good and defensible
title to all of its material properties and assets, free and clear of all Liens
other than Permitted Liens and of all material impediments to the use of such
properties and assets in the businesses of the Company and the Subsidiaries.
(b) Each of the Company and the Subsidiaries holds all material
Permits necessary or required for the conduct of its business. Each of such
Permits is in full force and effect, the Company and the Subsidiaries are in
compliance with all of its material obligations with respect thereto, and, to
the best knowledge of the Company, no event has occurred which allows, or with
or without the giving of notice or the passage of time or both would allow, the
revocation or termination of any thereof. No notice has been issued by any
Governmental Entity and no proceeding is pending or, to the best knowledge of
the Company, threatened with respect to any alleged failure by the Company or
any Subsidiary to have any material Permit.
(c) The Company and the Subsidiaries possess all licenses, permits,
franchises, patents, copyrights, trademarks and trade names, and other
intellectual property (or otherwise possesses the right to use such intellectual
property without violation of the rights of any other Person) which are
necessary to carry out their businesses as presently conducted and as presently
proposed to be conducted hereafter, and neither the Company nor any Subsidiaries
is in violation in any
-18-
material respect of the terms under which it possesses such intellectual
property or the right to use such intellectual property.
(d) The equipment and other tangible assets of the Company and the
Subsidiaries are in good operating condition (except for reasonable wear and
tear), and have been reasonably maintained.
(e) The Company has conducted a reasonable and prudent due diligence
investigation of the assets to be acquired pursuant to the Burlington Agreement,
and, to the best knowledge of the Company, the representations and warranties of
Burlington Resources (Irish Sea) Limited in the Burlington Agreement are true
and correct in all material respects.
4.18 ERISA.
(a) Set forth on Schedule 4.18 is a list identifying each "employee
benefit plan", as defined in Section 3(3) of ERISA, (i) which is subject to any
provision of ERISA, (ii) which is maintained, administered, or contributed to by
the Company or any affiliate of the Company, and (iii) which covers any employee
or former employee of the Company or any affiliate of the Company or under which
the Company or any affiliate of the Company has any liability. The Company has
delivered or made available to Buyer accurate and complete copies of such plans
(and, if applicable, the related trust agreements) and all amendments thereto
and written interpretations thereof, together with (i) the three most recent
annual reports (Form 5500 including, if applicable, Schedule B thereto) prepared
in connection with any such plan and (ii) the most recent actuarial valuation
report prepared in connection with any such plan. Such plans are referred to in
this Section as the "Employee Plans". For purposes of this Section only, an
"affiliate" of any person means any other person which, together with such
person, would be treated as a single employer under Section 414 of the Code. The
only Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" as defined in Section 3(2) of ERISA are
identified as such on Schedule 4.18.
(b) Except as otherwise identified on Schedule 4.18, (i) no Employee
Plan constitutes a "multiemployer plan", as defined in Section 3(37) of ERISA
(for purposes of this Section, a "Multiemployer Plan"), (ii) no Employee Plan is
maintained in connection with any trust described in Section 501(c)(9) of the
Code, (iii) no Employee Plan is subject to Title IV of ERISA or to the minimum
funding standards of ERISA and the Code, and (iv) during the past five years,
neither the Company nor any of its affiliates have made or been required to make
contributions to any Multiemployer Plan. There are no accumulated funding
deficiencies as defined in Section 412 of the Code (whether or not waived) with
respect to any Employee Plan. The fair market value of the assets held with
respect to each Employee Plan which is an employee pension benefit plan, as
defined in Section 3(2) of ERISA, exceeds the actuarially determined present
value of all benefit liabilities accrued under such Employee Plan (whether or
not vested) determined using reasonable actuarial assumptions. Neither the
Company nor any affiliate of the Company has incurred any material liability
under Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA. The Company and all of the affiliates of the Company have
paid and discharged promptly when due all liabilities and obligations arising
under ERISA or the Code of a character which if unpaid or unperformed might
-19-
result in the imposition of a lien against any of the assets of the Company or
any Subsidiary. Nothing done or omitted to be done and no transaction or holding
of any asset under or in connection with any Employee Plan has or will make the
Company or any Subsidiary or any director or officer of the Company or any
Subsidiary subject to any liability under Title I of ERISA or liable for any Tax
pursuant to Section 4975 of the Code that could have a Material Adverse Effect.
There are no threatened or pending claims by or on behalf of the Employee Plans,
or by any participant therein, alleging a breach or breaches of fiduciary duties
or violations of Applicable Laws which could result in liability on the part of
the Company, its officers or directors, or such Employee Plans, under ERISA or
any other Applicable Law and there is no basis for any such claim.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified since the
date of its adoption, and each trust forming a part thereof is exempt from Tax
pursuant to Section 501(a) of the Code. Set forth on Schedule 4.18 is a list of
the most recent IRS determination letters with respect to any such Plans,
accurate and complete copies of which letters have been delivered or made
available to Buyer. Each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by all Applicable Laws, including
but not limited to ERISA and the Code, which are applicable to such Employee
Plans.
(d) Set forth on Schedule 4.18 is a list of each employment,
severance, or other similar contract, arrangement, or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained, or contributed to, as the case may be, by the Company
or any affiliate of the Company, and (iii) covers any employee or former
employee of the Company or any affiliate of the Company or under which the
Company or any affiliate of the Company has any liability. Such contracts,
plans, and arrangements as are described in the preceding sentence are referred
to for purposes of this Section as the "Benefit Arrangements". Each Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by Applicable Laws.
(e) Neither the Company nor any affiliate of the Company has
performed any act or failed to perform any act, and there is no contract,
agreement, plan, or arrangement covering any employee or former employee of the
Company or any affiliate of the Company, that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(a)(1) or 280G of the Code, or could give
rise to any penalty or excise Tax pursuant to Section 4980B or 4999 of the Code.
4.19 Agreements.
(a) Set forth on Schedule 4.19 is a list of all the following
agreements, arrangements, and understandings (written or oral, formal or
informal) (collectively, for purposes of this Section, "agreements") to which
the Company or any Subsidiary is a party or by which the Company or any
-20-
Subsidiary or any of their respective properties is otherwise bound:
(i) collective bargaining agreements and similar agreements
with employees as a group;
(ii) agreements with any current or former shareholder,
director, officer, employee, consultant or advisor or any affiliate of any
such Person;
(iii) agreements between or among the Company and any of the
Subsidiaries;
(iv) exclusive of those relating to the Senior Credit Facility,
indentures, mortgages, security agreements, notes, loan or credit
agreements, or other agreements relating to the borrowing of money by the
Company or any Subsidiary or to the direct or indirect guarantee or
assumption by the Company or any Subsidiary of any obligation of others,
including any agreement that has the economic effect although not the legal
form of any of the foregoing;
(v) agreements relating to the acquisition or disposition of
assets, other than those entered into in the ordinary course of business
consistent with past practice;
(vi) agreements relating to the acquisition or disposition of
any interest in any business enterprise;
(vii) exclusive of oil, gas and mineral leases, agreements with
respect to the lease of real or personal property;
(viii) exclusive of oil and gas operating or similar agreements,
agreements concerning the management or operation of any real property;
(ix) partnership, joint venture, and profit sharing agreements;
(x) agreements with any Governmental Entity;
(xi) agreements relating to the release or disposal of
Hazardous Material;
(xii) agreements containing any covenant limiting the freedom of
the Company or any Subsidiary to engage in any line of business or compete
with any other Person in any geographic area or during any period of time,
other than those that would not have a Material Adverse Effect;
(xiii) agreements not made in the ordinary course of business;
and
(xiv) other agreements, whether or not made in the ordinary
course of business, that are material to the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Company
and the Subsidiaries considered as a whole.
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(b) The Company has delivered or made available to Buyer accurate and
complete copies of the agreements listed in Schedule 4.19. Each of such
agreements is a valid and binding agreement of the Company and the Subsidiaries
(to the extent each is a party thereto) and (to the best knowledge of the
Company) the other party or parties thereto, enforceable against the Company and
the Subsidiaries (to the extent each is a party thereto) and (to the best
knowledge of the Company) such other party or parties in accordance with its
terms. Neither the Company nor any Subsidiary is in breach of or in default
under, nor has any event occurred which (with or without the giving of notice or
the passage of time or both) would constitute a default by the Company or any
Subsidiary under, any of such agreements, and neither the Company nor any
Subsidiary has received any notice from, or given any notice to, any other party
indicating that the Company or any Subsidiary is in breach of or in default
under any of such agreements. To the best knowledge of the Company, no other
party to any of such agreements is in breach of or in default under such
agreements, nor has any assertion been made by the Company or any Subsidiary of
any such breach or default.
(c) Neither the Company nor any Subsidiary has received notice of any
plan or intention of any other party to any agreement to exercise any right of
offset with respect to, or any right to cancel or terminate, any agreement, and
neither the Company nor any Subsidiary knows of any fact or circumstance that
would justify the exercise by any such other party of such a right other than
the automatic termination of such agreement in accordance with its terms.
Neither the Company nor any Subsidiary currently contemplates, or has reason to
believe any other Person currently contemplates, any amendment or change to any
agreement, which amendment or change could have a Material Adverse Effect.
(d) Without limiting the generality of the other provisions in this
Section 4.19, the Key Employment Agreements are in full force and effect, and
each of John Keenan, Paul Fenemore and Harry Brian Kerr Williams is currently
employed by the Company pursuant to a renewal term under such agreements.
4.20 Labor Disputes and Acts of God. Neither the business nor the
properties of the Company nor any Subsidiary has been affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which, individually or in the aggregate,
could cause a Material Adverse Effect.
4.21 Registration Rights. As of the date hereof, the Company has no
obligation to register any of its securities (including debt securities) under
the Securities Act, the Listing Rules or applicable similar foreign laws or
regulations. As of the Closing Date, except pursuant to the Registration
Rights Agreement and as set forth on Schedule 4.21, the Company will have no
obligation to register any of its securities (including debt securities) under
the Securities Act, the Listing Rules or applicable similar foreign laws or
regulations.
4.22 Offering of Securities. All securities which have been offered
or sold by the Company have been registered pursuant to the Securities Act and
applicable foreign and state securities laws or were offered and sold pursuant
to valid exemptions therefrom.
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4.23 Government Regulation. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935. The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or an "investment
advisor" within the meaning of the Investment Advisers Act of 1940, as amended.
4.24 Brokerage Fees. Neither the Company nor any of its affiliates
has retained any financial advisor, broker, agent or finder or paid or agreed to
pay any financial advisor, broker, agent or finder on account of this Agreement
or any transaction contemplated hereby, which action would subject Buyer or any
of its affiliates to any liability. The Company shall indemnify and hold
harmless Buyer from and against any and all losses, claims, damages and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission or similar payment in connection with
any transaction contemplated hereby asserted by any Person on the basis of any
act or statement made or alleged to have been made by the Company or any of its
affiliates.
4.25 Solvency.
(a) No order has been made or resolution passed for the winding up of
the Company and/or any of its Subsidiaries and there is not outstanding (i) any
petition or order for the winding up of the Company or any of its Subsidiaries;
(ii) any receivership of the whole or any part of the Company or any of its
Subsidiaries; (iii) any petition or order for the administration of the Company
or any of its Subsidiaries; or (iv) any voluntary arrangement between the
Company or any of its Subsidiaries.
(b) There are no circumstances which are known, or would on
reasonable inquiry be known, to the Company or any of its Subsidiaries which
would entitle any person to present a petition for the winding up or
administration of the Company or any of its Subsidiaries or to appoint a
receiver of the whole or any part of its undertaking or assets.
(c) Neither the Company nor any of its Subsidiaries is deemed unable
to pay its debts within the meaning of Section 1.23 of the Insolvency Act 1986.
(d) No event analogous to any of the matters set out in this Section
4.25 has occurred outside England and Wales.
4.26 Full Disclosure. No representation or warranty made by the
Company in this Agreement, and no statement of the Company contained in any
document, certificate or other writing furnished or to be furnished by the
Company or its representatives to Buyer pursuant hereto or in connection
herewith, contains or will contain, at the time of delivery, any untrue
statement of a material fact or omits or will omit, at the time of delivery, to
state any material fact (other than industry-wide risks normally associated with
the type of business conducted by the Company) necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
misleading. There is no fact known to the Company (other than industry-wide
risks normally associated with the type of business conducted by the Company)
that
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has not been disclosed to Buyer in writing which the Company reasonably
anticipates would result in a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of EnCap LP and ECIC hereby severally and as to itself represents and
warrants to the Company that (as used in this Article V the term "Buyer" shall
be deemed to mean only the Person making such representation or warranty):
5.1 Corporate Organization. Buyer is duly organized and validly
existing under the laws of the jurisdiction of its formation.
5.2 Authority Relative to This Agreement. Buyer has full power and
authority to execute, deliver, and perform this Agreement and the Ancillary
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution, delivery, and performance by Buyer of this
Agreement and the Ancillary Documents to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary action of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes, and each Ancillary
Document executed or to be executed by Buyer has been, or when executed will be,
duly executed and delivered by Buyer and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms, except that
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
5.3 Investment Intent; Investment Experience; Restricted Securities.
Buyer is acquiring the Securities for its own account for investment and not
with a view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof. In acquiring the Securities, Buyer is
not offering or selling, and will not offer or sell, for the Company in
connection with any distribution of the Securities, and Buyer does not have a
participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable federal
and state securities laws. Buyer acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Securities, and has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Securities.
Buyer understands that the Securities will not have been registered pursuant to
the Securities Act or any applicable state securities laws, that the Securities
will be characterized as "restricted securities" under federal securities laws
and that under such laws and applicable regulations the Securities cannot be
sold or otherwise disposed of without registration under the Securities Act or
an exemption therefrom.
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5.4 Brokerage Fees. Neither Buyer nor any of its affiliates has
retained any financial advisor, broker, agent or finder or paid or agreed to pay
any financial advisor, broker, agent or finder on account of this Agreement or
any transaction contemplated hereby, which action would subject the Company or
any of its affiliates to any liability. Buyer shall indemnify and hold harmless
the Company from and against any and all losses, claims, damages and liabilities
(including legal and other expenses reasonably incurred in connection with
investigating or defending any claims or actions) with respect to any finder's
fee, brokerage commission or similar payment in connection with any transaction
contemplated hereby asserted by any Person on the basis of any act or statement
made or alleged to have been made by Buyer or any of its affiliates.
ARTICLE VI
CONDUCT OF COMPANY PENDING CLOSING
The Company hereby covenants and agrees with Buyer as follows:
6.1 Conduct and Preservation of Business. Except as expressly provided
in this Agreement, during the period from the date hereof to the Closing, the
Company and the Subsidiaries (i) shall each conduct its operations according to
its ordinary course of business consistent with past practice and in compliance
with all Applicable Laws; (ii) shall each use its reasonable best efforts to
preserve, maintain and protect its properties; and (iii) shall each use its
reasonable best efforts to preserve intact its business organization, to keep
available the services of its officers and employees, and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it.
6.2 Restrictions on Certain Actions. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Closing, neither the Company nor any Subsidiary shall, without the
prior written consent of Buyer:
(a) except as provided in the Notice of Extraordinary Meeting
dated October 7, 1998 contained in the Listing Particulars, amend its
Organic Documents or other governing instruments;
(b) (i) except as provided (A) in the Notice of Extraordinary
Meeting dated October 7, 1998 contained in the Listing Particulars or (B)
in Section 6.3 hereof, issue, sell, or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase, or otherwise) any shares of its capital stock of any
class or any other securities or equity equivalents; or (ii) amend in any
respect any of the terms of any such securities outstanding as of the date
hereof;
(c) (i) except as provided in the Notice of Extraordinary Meeting
dated October 7, 1998 contained in the Listing Particulars, split, combine,
or reclassify any shares of its capital stock; (ii) declare, set aside, or
pay any dividend or other distribution (whether in cash,
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stock, or property or any combination thereof) in respect of its capital
stock; (iii) repurchase, redeem, or otherwise acquire any of its securities
or any securities of any Subsidiary; or (iv) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing a
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization of the Company or any Subsidiary;
(d) (i) except in the ordinary course of business consistent with
past practice, create, incur, guarantee, or assume any indebtedness for
borrowed money or otherwise become liable or responsible for the
obligations of any other Person; (ii) make any loans, advances, or capital
contributions to, or investments in, any other Person (other than customary
loans or advances to employees in amounts not material to the maker of such
loan or advance); (iii) pledge or otherwise encumber shares of capital
stock of the Company or any Subsidiary; or (iv) except in the ordinary
course of business consistent with past practice, mortgage or pledge any of
its assets, tangible or intangible, or create or suffer to exist any lien
thereupon;
(e) (i) enter into, adopt, or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee; (ii) except for normal
increases in the ordinary course of business consistent with past practice
that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company, increase in any manner the
compensation or fringe benefits of any director, officer or employee; or
(iii) pay to any director, officer or employee any benefit not required by
any employee benefit agreement, trust, plan, fund or other arrangement as
in effect on the date hereof;
(f) acquire, sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any assets outside the ordinary course of business
consistent with past practice or any assets that in the aggregate are
material to the Company and the Subsidiaries considered as a whole;
(g) acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof;
(h) make any capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess
of $250,000;
(i) amend any Tax Return or make any Tax election or settle or
compromise any federal, state, local, or foreign Tax liability material to
the Company and the Subsidiaries considered as a whole;
(j) pay, discharge, or satisfy any claims, liabilities, or
obligations (whether accrued, absolute, contingent, unliquidated, or
otherwise, and whether asserted or unasserted), other than the payment,
discharge, or satisfaction in the ordinary course of
-26-
business consistent with past practice, or in accordance with their terms,
of liabilities reflected or reserved against in the Financial Statements or
incurred since the date of the Latest Balance Sheet in the ordinary course
of business consistent with past practice; provided, however, that in no
event shall the Company or any Subsidiary repay any long-term indebtedness
except to the extent required by the terms thereof;
(k) enter into any lease, contract, agreement, commitment,
arrangement or transaction outside the ordinary course of business
consistent with past practice;
(l) amend the Difco Agreement, the Burlington Agreement or the
Senior Credit Facility;
(m) amend, modify, or change any existing lease, contract or
agreement (exclusive of the contracts described in subsection (l)), other
than in the ordinary course of business consistent with past practice;
(n) waive, release, grant or transfer any rights of value, other
than in the ordinary course of business consistent with past practice;
(o) change any of the accounting principles or practices used by
it;
(p) take any action which would or might make any of the
representations or warranties of the Company contained in this Agreement
untrue or inaccurate as of any time from the date of this Agreement to the
Closing or would or might result in any of the conditions set forth in this
Agreement not being satisfied; or
(q) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
6.3 Certain Action. Notwithstanding the foregoing provisions of this
Article VI, the Acquisitions and the transactions contemplated by the Senior
Credit Facility may be consummated as provided in this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument or document delivered pursuant hereto or in connection herewith on or
prior to the Closing Date, shall be true and correct in all material
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respects on and as of the Closing Date as if made on and as of such date, except
as affected by transactions permitted by this Agreement, including the
Acquisitions, the Senior Credit Facility and the receipt of Shareholder
Approval, and except to the extent that any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall
have been true and correct in all material respects as of such specified date.
For the sole purpose of determining whether or not any of such representations
and warranties are true and correct as aforesaid on and as of the Closing Date,
no effect shall be given to any materiality qualification contained in such
representation or warranty.
7.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and all deliveries contemplated by Section 3.3 shall have been made.
7.3 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
7.4 Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Entity or any securities
exchange, and no statute, rule, regulation or executive order promulgated,
enacted or issued by a Governmental Entity or any securities exchange, shall be
in effect which restrains, enjoins, prohibits or otherwise makes illegal or
improper the consummation of the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
8.1 Representations and Warranties True. All the representations and
warranties of the Company contained in this Agreement, and in any agreement,
instrument or document delivered pursuant hereto or in connection herewith on or
prior to the Closing Date, shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date, except as affected
by transactions permitted by this Agreement, including the Acquisitions, the
Senior Credit Facility and the receipt of Shareholder Approval, and except to
the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct in all material respects as of such specified date. For the sole
purpose of determining whether or not any of such representations and warranties
are true and correct as aforesaid on and as of the Closing Date, no effect shall
be given to any materiality qualification contained in such representation or
warranty.
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8.2 Covenants and Agreements Performed. The Company shall have
performed and complied with in all material respects all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date, and all deliveries contemplated by Section 3.2
shall have been made.
8.3 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
8.4 Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Entity or any securities
exchange, and no statute, rule, regulation or executive order promulgated,
enacted or issued by a Governmental Entity or any securities exchange, shall be
in effect which restrains, enjoins, prohibits or otherwise makes illegal the
consummation of the transactions contemplated hereby.
8.5 Consents. There shall have been obtained the Shareholder Approval
and any and all consents, approvals, authorizations, licenses, orders or permits
set forth on Schedule 4.7; and no other consent, approval, authorization,
license, order or permit of, or declaration, filing or registration with, or
notification to, any Governmental Entity, or any other Person or entity, the
failure to comply with which would have a Material Adverse Effect, shall be
required to be made or obtained by the Company or any Subsidiary in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
8.6 No Material Adverse Change. Since the date of this Agreement, there
shall not have been any material adverse change in the business, assets, results
of operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries considered as a whole.
8.7 Senior Credit Facility. The Company, Alliance USA, GOCA, LPC, New
GOC and Source shall have executed and delivered the Senior Credit Facility,
substantially in the form of the final draft furnished to Buyer in all material
respects.
8.8 Subordination Agreement. Buyer and the lender under the Senior
Credit Facility shall have executed and delivered a materially acceptable
subordination agreement.
8.9 U.K. Opinion. Buyer shall have received an opinion of Richards
Butler dated the Closing Date and in form and substance satisfactory to Buyer
concerning choice of law and such other matters as Buyer may request.
8.10 Closing of the Acquisitions and the Senior Credit Facility. All
conditions precedent to the closings of the Acquisitions and the Senior Credit
Facility (other than conditions with respect to the consummation, simultaneously
with such closings, of the transactions contemplated hereby) shall have been
satisfied at or prior to the Closing, and such closings shall have occurred
prior to or be occurring simultaneously with the Closing.
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ARTICLE IX
PRE-CLOSING TERMINATION
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of the Company and Buyer; or
(b) by either the Company or Buyer, if any Governmental Entity
with jurisdiction over such matters shall have issued an order or
injunction restraining, enjoining or otherwise prohibiting the sale of the
Securities or the Placement Fee Shares hereunder and such order, decree,
ruling or other action shall have become final and unappealable;
(c) by either Company or Buyer, if the Closing shall not have
occurred on or before October 30, 1998; provided, however, that the right
to terminate this Agreement under this Section 9.1(c) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 by the Company, on the one hand, or Buyer, on
the other, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall become void and have no effect, except that the agreements
contained in this Section, in Sections 14.6 and 14.7 and in Article XV shall
survive the termination hereof. Nothing contained in this Section shall relieve
any party from liability for damages actually incurred as a result of any breach
of this Agreement.
ARTICLE X
AFFIRMATIVE COVENANTS OF THE COMPANY
To induce Buyer to enter into this Agreement, the Company warrants,
covenants and agrees that until the full and final payment of the Obligations:
10.1 Payment and Performance. The Company will pay all amounts due under
the Notes in accordance with the terms thereof and will observe, perform and
comply with every covenant, term and condition expressed or implied in this
Agreement. The Company will cause each of its Subsidiaries to observe, perform
and comply with every such term, covenant and condition to the extent applicable
to such Subsidiary.
10.2 Books, Financial Statements and Reports. The Company and each of
its Subsidiaries will at all times maintain full and accurate books of account
and records. The Company will maintain
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and will cause its Subsidiaries to maintain a standard system of accounting,
will maintain its Fiscal Year, and will furnish the following statements and
reports to Buyer at the Company's expense:
(a) As soon as available, and in any event within one hundred five
(105) days after the end of each Fiscal Year, complete consolidated financial
statements of the Company together with all notes thereto, prepared in
reasonable detail in accordance with U.S. GAAP, together with an unqualified
opinion, based on an audit using generally accepted auditing standards, by
independent certified public accountants selected by the Company and reasonably
acceptable to Buyer, stating that such consolidated financial statements have
been so prepared. These financial statements shall contain a consolidated
balance sheet as of the end of such Fiscal Year and consolidated statements of
earnings, of cash flows, and of changes in owners' equity for such Fiscal Year,
each setting forth in comparative form the corresponding figures for the
preceding Fiscal Year.
(b) As soon as available, and in any event within fifty (50) days after
the end of each Fiscal Quarter, the Company's consolidated balance sheet as of
the end of such Fiscal Quarter and consolidated statements of the Company's
earnings and cash flows for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with U.S. GAAP, subject to changes resulting from normal
year-end adjustments. In addition the Company will, together with each such set
of financial statements and each set of financial statements furnished under
subsection (a) of this section, furnish a certificate in a form reasonably
acceptable to Buyer signed by the chief financial officer of the Company stating
that such financial statements are accurate and complete (subject to normal
year-end adjustments) and stating that no Default exists at the end of such
Fiscal Quarter or at the time of such certificate or specifying the nature and
period of existence of any such Default.
(c) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Company to its
stockholders and all registration statements, periodic reports and other
statements and schedules filed by the Company with any securities exchange, the
Securities and Exchange Commission or any similar Governmental Entity.
(d) Annually within 60 days after the end of each Fiscal Year beginning
with the Fiscal Year ending April 30, 1999, a report containing (i) an
estimation of the oil and gas reserves, classified by appropriate categories, as
of the end of the preceding fiscal year attributable to the interest of the
Company therein, (ii) a projection of the rate of production of and net income
from such reserves with respect to each such interest, (iii) a calculation of
the present worth of such net income discounted at a rate of 10% and at any
other rates designated from time to time by a Majority of the Noteholders and
(iv) a schedule or complete description of all assumptions, estimates and
projections made or used in the preparation of such report. Each such report
shall be prepared in accordance with customary and generally accepted standards
and practices for petroleum engineers, and shall be based on (1) prices
determined by a Majority of the Noteholders, (2) lease operating expenses and
production taxes derived from and consistent with those actually incurred by the
Company, escalated at the same rate, if any, being applied to prices and (3)
such other assumptions as shall be designated by a Majority of the Noteholders.
In addition to the foregoing, a Majority of the Noteholders shall have the right
from time to time to cause the independent petroleum engineer referenced below
to prepare an additional report of the type described above, not to exceed one
additional report in any
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one calendar year, in which event all fees and expenses incurred in connection
with obtaining such additional report shall be paid by the Company. Each report
under this subsection shall be prepared by an independent petroleum engineer
designated by the Company and approved by a Majority of the Noteholders. Each
annual report referenced above shall also include an estimate of the Company's
proved oil and gas reserves (as defined in Regulation S-X promulgated by the
Securities and Exchange Commission) and a calculation of the "present value of
estimated future net revenues" from such proved oil and gas reserves, with such
present worth calculation to be made in accordance with Regulation S-X, as
promulgated by the Securities and Exchange Commission.
(e) Promptly, such other information with respect to the business and
operations of the Company and its Subsidiaries, as Buyer may reasonably request.
10.3 Notice of Material Events and Change of Address. The Company
will promptly notify Buyer in writing, stating that such notice is being given
pursuant to this Agreement, of:
(a) the occurrence of any Material Adverse Effect,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any indebtedness owed by
the Company or any Subsidiary thereof or of any default by any the Company
or any such Subsidiary under any indenture, mortgage, agreement, contract
or other instrument to which any of them is a party or by which any of them
or any of their properties is bound, if such acceleration or default could
reasonably be expected to have a Material Adverse Effect,
(d) any claim of $100,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount, or
any other material adverse claim asserted against the Company or any
Subsidiary thereof or with respect to the Company or any of such
Subsidiary's properties, an d
(e) the filing of any suit or proceeding against the Company or
any Subsidiary thereof in which an adverse decision could cause a Material
Adverse Effect .
Upon the occurrence of any of the foregoing the Company and any Subsidiary
thereof will take all necessary or appropriate steps to remedy promptly any such
Material Adverse Effect, Default, acceleration or default, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing.
10.4 Maintenance of Properties. The Company and each of its
Subsidiaries will maintain, preserve, protect, and keep all property used or
useful in the conduct of its business in good condition and in compliance with
all Applicable Laws, and will from time to time make all repairs, renewals and
replacements needed to enable the business and operations carried on in
connection therewith to be promptly and advantageously conducted at all times.
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10.5 Maintenance of Existence and Qualifications. The Company and each
of its Subsidiaries will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by Applicable Law, except where the
failure so to qualify will not cause a Material Adverse Effect.
10.6 Payment of Trade Liabilities, Taxes, etc. The Company and each of
its Subsidiaries will (a) timely file all required Tax Returns; (b) timely pay
all Taxes, assessments, and other governmental charges or levies imposed upon it
or upon its income, profits or property; (c) timely withhold and pay over to the
proper Governmental Entity all amounts required to be withheld and paid over
under Applicable Laws; (d) pay when due all Liabilities owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and services
used by it in the ordinary course of its business; (e) pay and discharge when
due all other Liabilities now or hereafter owed by it; and (f) maintain
appropriate accruals and reserves for all of the foregoing in accordance with
U.S. GAAP. The Company and each of its Subsidiaries may, however, delay paying
or discharging any of the foregoing so long as it is in good faith contesting
the validity thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.
10.7 Insurance. The Company and each of its Subsidiaries will keep or
cause to be kept insured by financially sound and reputable insurers its
properties in such forms and amounts and against such risks as are customary for
Persons engaged in the same or similar business of owning and operating similar
properties.
10.8 Compliance with Agreements and Law. The Company and each of its
Subsidiaries will perform all material obligations it is required to perform
under the terms of each indenture, mortgage, deed of trust, security agreement,
lease, franchise, agreement, contract or other instrument or obligation to which
it is a party or by which it or any of its properties is bound. The Company and
each of its Subsidiaries will conduct its business and affairs in compliance
with all Applicable Law.
10.9 Guaranties of Company's Subsidiaries. Each Subsidiary (other than
the Subsidiary Guarantors) of the Company now existing or created, acquired or
coming into existence after the date hereof shall, promptly upon request by
Buyer, execute and deliver to Buyer an absolute and unconditional guaranty of
the timely repayment of the Notes and the due and punctual performance of the
obligations of the Company hereunder, which guaranty shall be satisfactory to
Buyer in form and substance. The Company will cause each of its Subsidiaries to
deliver to Buyer, simultaneously with its delivery of such a guaranty, written
evidence satisfactory to Buyer and its counsel that such Subsidiary has taken
all corporate or partnership action necessary to duly approve and authorize its
execution, delivery and performance of such guaranty and any other documents
which it is required to execute.
ARTICLE XI
NEGATIVE COVENANTS OF THE COMPANY
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To induce Buyer to enter into this Agreement, the Company warrants,
covenants and agrees that until the full and final payment of the Obligations:
11.1 Indebtedness. Neither the Company nor any Subsidiary thereof will
in any manner owe or be liable for Indebtedness except:
(a) the Obligations;
(b) the Senior Credit Facility;
(c) Indebtedness owed by the Company or any Subsidiary thereof which is
subordinated to the Obligations upon terms and conditions satisfactory to EnCap
LP and ECIC in their sole and absolute discretion;
(d) purchase money Indebtedness and Indebtedness under leases of the
Company or such Subsidiary as lessee which are capitalized in accordance with
U.S. GAAP, in an aggregate principal amount not to exceed $100,000 at any time,
provided that such purchase money Indebtedness and Indebtedness under capital
leases do not in the aggregate exceed $250,000; and
(e) Old Latex Payables.
11.2 Limitation on Liens. Neither the Company nor any Subsidiary thereof
will create, assume or permit to exist any Lien upon any of the properties or
assets which it now owns or hereafter acquires, except the following ("Permitted
Liens"):
(a) Liens which secure Obligations only;
(b) Liens which secure the Senior Credit Facility; and
(c) Statutory Liens for taxes, statutory mechanics' and materialmen's
Liens incurred in the ordinary course of business, and other similar Liens
incurred in the ordinary course of business, provided such Liens do not secure
Indebtedness and secure only Indebtedness which is not delinquent or for which
adequate reserves have been set aside.
11.3 Limitation on Mergers. Except as expressly provided in this
Section, neither the Company nor any Subsidiary thereof will merge or
consolidate with or into any other business entity. Any Subsidiary of the
Company may, however, be merged into or consolidated with either the Company or
another Subsidiary which is wholly-owned by the Company, so long as the Company
or the Subsidiary wholly-owned by the Company is the surviving business entity.
The Company will not issue any securities other than (i) Ordinary Shares, (ii)
deferred shares having nominal value and no voting rights, (iii) the
"Convertible Shares," as defined in the Difco Agreement, or (iv) any options or
warrants giving the holders thereof only the right to acquire such shares. No
Subsidiary of the Company will issue any additional shares of its capital stock
or other securities or any options, warrants or other rights to acquire such
additional shares or other securities except to the Company or to another
Subsidiary. No Subsidiary of the Company
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which is a partnership will allow any diminution of the Company's interest
(direct or indirect) therein.
11.4 Limitation on Sales of Property. Neither the Company nor any
Subsidiary thereof will sell, transfer, lease, exchange, alienate or dispose of
any of its assets or properties except:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(b) inventory (including oil and gas sold as produced and seismic data)
which is sold in the ordinary course of business on ordinary trade terms; or
(c) other property which is sold for fair consideration not in the
aggregate in excess of $500,000 in any Fiscal Year (commencing with Fiscal Year
1999).
11.5 Limitation on Investments and New Businesses. Neither the Company
nor any Subsidiary thereof will make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business (which ordinary course of business includes the acquisition,
directly or indirectly, of oil and gas properties), engage directly or
indirectly in any business or conduct any operations except in connection with
or incidental to its present businesses and operations, make any acquisitions of
or capital contributions to or other investments in any Person, other than
Permitted Investments, or make any significant acquisitions or investments in
any properties other than oil and gas properties.
11.6 Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries will engage in any material transaction with any of its affiliates
on terms which are less favorable to it than those which would have been
obtainable at the time in arm's-length dealing with Persons other than such
affiliates.
11.7 Restricted Payments. The Company will not, and will not permit any
of its Subsidiaries to, declare or make, or incur any liability to declare or
make, any Restricted Payment.
11.8 Material Amendments. The Company will not, and will not permit any
of its Subsidiaries to, consent to any material amendment, supplement or other
modification to any of the terms and provisions of the Burlington Agreement or
the Difco Agreement.
ARTICLE XII
PREPAYMENT OF THE NOTE
12.1 Optional Prepayment. The Company may, upon not less than thirty
days' notice to the holders of the Notes, from time to time and without premium
or penalty prepay the Notes in cash, in whole or in part, so long as the
aggregate amount of each partial prepayment of principal on the Notes equals at
least $1,000,000 or any higher integral multiple of $1,000,000. Each
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prepayment of principal under this Section 12.1 shall be accompanied by all
interest then accrued and unpaid on the principal so prepaid. All principal and
interest prepaid pursuant to this Section 12.1 shall be in addition to, but not
in lieu of, all payments otherwise required to be paid under the Agreement or
the Ancillary Documents at the time of such prepayment.
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES
13.1 Events of Default. Each of the following constitutes an "Event of
Default" for purposes of the Notes and this Agreement:
(a) a default in the payment of principal of any Note when and as the
same shall become due and payable;
(b) a default in the payment of any interest upon any Note when such
interest becomes due and payable;
(c) a default in the performance or observation of any covenant,
agreement or condition contained in either Article X or Article XI, which
default is not remedied within 30 days after the earlier of (i) the day on which
the Company first obtains knowledge of such default or (ii) the day on which
written notice thereof is given to the Company by the holder of any Note;
(d) any "default" or "event of default" occurs under any this Agreement
or any Ancillary Document which defines either such term, and the same is not
remedied within the applicable period of grace (if any) provided in this
Agreement or such Ancillary Document;
(e) any representation or warranty previously, presently or hereafter
made in writing by or on behalf of the Company or any Subsidiary thereof in
connection with this Agreement or any Ancillary Document shall prove to have
been false or incorrect in any material respect on any date on or as of which
made, which default is not remedied within 30 days after the earlier of (i) the
day on which the Company first obtains knowledge of such default or (ii) the day
on which written notice thereof is given to the Company by the holder of any
Note;
(f) the Company or any Subsidiary fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of any loan
document relating to the Senior Credit Facility or any other agreement or
instrument, if such agreement or instrument is materially significant to the
Company or such Subsidiary, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or instrument;
(g) the Company or any Subsidiary thereof fails to pay any portion,
when such portion is due, of any of its Indebtedness in excess of $100,000
(exclusive of the Old Latex Payables), or breaches or defaults in the
performance of any Agreement or instrument by which any such
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Indebtedness is issued, evidenced, governed, or secured, and any such failure,
breach or default continues beyond any applicable period of grace provided
therefor;
(h) the Company or any Subsidiary thereof:
(i) suffers the entry against it of a judgment, decree or order
for relief by a tribunal of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or other
similar Applicable Law of any jurisdiction now or hereafter in effect,
including the United States federal Bankruptcy Code or similar foreign law,
as from time to time amended, or has any such proceeding commenced against
it which remains undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar Applicable Law now or hereafter in effect, including
the United States federal Bankruptcy Code or similar foreign law, as from
time to time amended; or applies for or consents to the entry of an order
for relief in an involuntary case under any such Applicable Law; or makes a
general assignment for the benefit of creditors; or fails generally to pay
(or admits in writing its inability to pay) its debts as such debts become
due; or takes corporate or other action to authorize any of the foregoing;
or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of all or a substantial part of its assets in a proceeding brought
against or initiated by it, and such appointment or taking possession is
neither made ineffective nor discharged within thirty days after the making
thereof, or such appointment or taking possession is at any time consented
to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $250,000 (not covered by insurance
satisfactory to the holders of the Notes in their discretion), unless the
same is discharged within thirty days after the date of entry thereof or an
appeal or appropriate proceeding for review thereof is taken within such
period and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any tribunal against all or any substantial part of
its assets, and such writ or warrant of attachment or any similar process
is not stayed or released within thirty days after the entry or levy
thereof or after any stay is vacated or set aside;
(i) Any Change in Control occurs; and
(j) Any Material Adverse Effect occurs.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to the Company or a Subsidiary
thereof, all of the Obligations shall thereupon be immediately due and payable,
without demand, presentment, notice of demand or of dishonor
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and nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of any
kind, all of which are hereby expressly waived by the Company and each such
Subsidiary. Upon the occurrence of an Event of Default described in subsection
(a) or subsection (b) of this section, any holder of a Note may during its
continuance, by written notice to the Company declare the Note held by it to be
due and payable, whereupon such Note shall forthwith mature and become due and
payable. Upon the occurrence of any other Event of Default, the Majority of
Noteholders may at any time during its continuance, declare all of the Notes to
be due and payable, whereupon all of the Notes shall forthwith mature and become
due and payable.
13.2 Remedies. If any Default shall occur and be continuing, the holder
of any Note may protect and enforce its rights under the this Agreement and the
Ancillary Documents by any appropriate proceedings, including proceedings for
specific performance of any covenant or agreement contained in this Agreement or
any Ancillary Document, and the holder of any Note may enforce the payment of
any Obligations due it or enforce any other legal or equitable right which it
may have. All rights, remedies and powers conferred upon the holders of the
Notes under this Agreement and the Ancillary Documents shall be deemed
cumulative and not exclusive of any other rights, remedies or powers available
under this Agreement or the Ancillary Documents or at law or in equity.
ARTICLE XIV
ADDITIONAL AGREEMENTS
14.1 Third Party Consents. The Company shall use its reasonable best
efforts to obtain all consents, approvals, orders, authorizations, and waivers
of, and to effect all declarations, filings, and registrations with, all third
parties (including Governmental Entities) that are necessary, required, or
deemed by Buyer to be desirable to enable the Company to issue the Securities to
Buyer and the Placement Fee Shares to an affiliate of Buyer as contemplated by
this Agreement and to otherwise consummate the transactions contemplated hereby.
All costs and expenses of obtaining or effecting any and all of the consents,
approvals, orders, authorizations, waivers, declarations, filings, and
registrations referred to in this Section shall be borne by the Company.
14.2 Access to Information. Between the date hereof and the Closing,
the Company (i) shall give Buyer and its authorized representatives reasonable
access, during regular business hours, to all employees, all plants, offices,
warehouses, and other facilities, and all books and records, including work
papers and other materials prepared by the Company's independent public
accountants, of the Company and the Subsidiaries, (ii) shall permit Buyer and
its authorized representatives to make such inspections as they may reasonably
require and (iii) shall cause the Company's officers and those of the
Subsidiaries to furnish Buyer and its authorized representatives with such
financial and operating data and other information with respect to the Company
and the Subsidiaries as Buyer may from time to time reasonably request;
provided, however, that the Company shall have the right to have a
representative present at all times of any such inspections, interviews and
examinations conducted at or on the offices or other facilities or properties of
the
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Company or its affiliates or representatives.
14.3 Listing of Shares. The Company shall use its reasonable best
efforts to cause the Shares and the Placement Fee Shares to be approved for
listing on each securities exchange, automated quotation system or over-the-
counter market upon which securities of the Company of the same class are listed
on the first business day following the Closing Date.
14.4 Use of Proceeds. The Company will use the Purchase Price to fund
the Acquisitions and for no other purpose, except as provided herein.
14.5 Board Representation. For up to as long as Buyer holds Ordinary
Shares of the Company that, together with any Ordinary Shares issuable upon
exercise or conversion of any other securities of the Company held by Buyer,
aggregate at least 1% of the issued and outstanding Ordinary Shares, (a) upon
request, the Company will use its reasonable best efforts to cause a designee of
Buyer to be elected as a member of the Board of Directors of the Company, (b) in
the event that any designee of Buyer elected to the Company's Board of Directors
shall cease to serve as a director for any reason, the Company will use its
reasonable best efforts to cause the vacancy resulting therefrom to be filled
with a designee of Buyer and (c) if, despite the Company's reasonable best
efforts, a designee of Buyer is not elected to the Company's Board of Directors,
the Company will use its reasonable best efforts to cause a designee of Buyer
(i) to be permitted to attend meetings of the Company's Board of Directors as a
non-voting observer, (ii) to receive information generally provided to the
Company's Board of Directors, including information with respect to various
corporate developments or transactions, and to have access to the books,
records, and properties of the Company and (iii) to meet with the executive
officers of the Company in order to provide advice and counsel with respect to
the management of the Company.
14.6 Public Announcements. Except as may be required by Applicable Law,
neither Buyer, on the one hand, nor the Company, on the other, shall issue any
press release or otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party (which consent shall not be unreasonably withheld).
Any such press release or public statement required by Applicable Law shall only
be made after reasonable notice to the other party, and in such case the party
proposing to make such a press release or public statement shall consult with
the other party.
14.7 Fees and Expenses. The Company shall bear its costs and expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the Ancillary Documents and the other documents and instruments
contemplated hereby and thereby, as well as the consummation of the transactions
contemplated hereby and thereby. The Company shall promptly (and in any event
within 30 days after any invoice or other statement or notice) pay the
reasonable costs and expenses incurred by or on behalf of Buyer, including
attorneys' fees, consultants' fees and engineering fees, travel costs and
miscellaneous expenses in connection with the negotiation, preparation,
execution and delivery of this Agreement and the Ancillary Documents and the
other documents and instruments contemplated hereby and thereby, as well as the
related due diligence and consummation of the transactions contemplated hereby
and thereby.
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14.8 Costs of Enforcement. If any party hereto is required to take
action to enforce its rights under this Agreement, the prevailing party shall be
entitled to its reasonable expenses, including attorneys' fees and expenses, in
connection with any such action.
14.9 Transfer Taxes. All sales, transfer, filing, recordation,
registration, stamp and similar Taxes and fees arising from or associated with
the issue and sale of the Securities and the Placement Fee Shares as
contemplated hereunder, whether levied on Buyer or the Company, shall be borne
by the Company, and the Company shall file all necessary documentation with
respect to, and make all payments of, such Taxes and fees on a timely basis.
14.10 Indemnification. The Company shall indemnify, defend and hold
harmless Buyer from and against any and all claims, actions, causes of action,
demands, assessments, losses, damages, liabilities, judgments, settlements,
penalties, costs and expenses (including reasonable attorneys' fees and
expenses), of any nature whatsoever, asserted against, resulting to, imposed
upon, or incurred by Buyer, directly or indirectly, by reason of or resulting
from any breach by the Company of any of its representations, warranties,
covenants or agreements contained in this Agreement or in any certificate,
instrument or document delivered pursuant hereto.
ARTICLE XV
MISCELLANEOUS
15.1 Notices.
(a) All notices, requests, demands, and other communications required
or permitted to be given or made hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) transmitted by first class registered or certified mail,
postage prepaid, return receipt requested, (iii) sent by prepaid overnight
courier service, or (iv) sent by telecopy or facsimile transmission, answer back
requested, to the parties at the following addresses (or at such other addresses
as shall be specified by the parties by like notice):
If to EnCap LP or ECIC:
Energy Capital Investment Company PLC
EnCap Equity 1996 Limited Partnership
c/o EnCap Investments L.C.
1100 Louisiana, Suite 3150
Houston, Texas 77002
Attention: Robert L. Zorich
Fax No.: 713-659-6130
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with a copy to:
Thompson & Knight, P.C.
1700 Chase Tower
600 Travis
Houston, TX 77002
Attention: Michael Pierce
Telefax: 713/217-2828
If to the Company or any Subsidiary:
Alliance Resources PLC
4200 East Skelly Drive, Suite 1000
Tulsa, Oklahoma 74135
Attention: John A. Keenan
Telefax: 918-494-4918
with a copy to:
Jenkens & Gilchrist, a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attention: W. Alan Kailer
Telefax: 214-855-4300
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, (ii) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefor or
(iii) if sent by telecopy or facsimile transmission, when the answer back is
received.
(b) The Company covenants and agrees that it will give all notices
required or permitted to be given by the Company to EnCap LP or ECIC as a member
or shareholder of the Company in accordance with this Section 15.1 and that to
the extent that this Section 15.1 conflicts with the Organic Documents of the
Company, this Section 15.1 shall control.
15.2 Waiver and Amendment. No failure or delay (whether by course of
conduct or otherwise) by any party hereto in exercising any right, power or
remedy which such holder may have under the Agreement or any of the Ancillary
Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or of any other right, power or remedy. No waiver of
any provision of this Agreement or any Ancillary Document and no consent to any
departure therefrom shall ever be effective unless it is in writing and signed
as provided below in this section, and then such waiver or consent shall be
effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. No waiver, consent, release,
modification or amendment of or supplement to this Agreement or any of the
Ancillary Documents shall be valid or effective against
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any party hereto unless the same is in writing and signed by such party.
15.3 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate, instrument or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party without contractual limitation.
Except as otherwise provided herein or therein, all agreements and/or covenants
of the Company contained in this Agreement or in any of the Ancillary Documents
shall survive the execution and delivery of this Agreement and the Ancillary
Documents and the performance hereof and thereof, and shall further survive
until all of the Obligations are paid in full and all of Buyer's obligations to
the Company are terminated.
15.4 Entire Agreement. This Agreement, together with the Schedules
and other writings referred to herein or delivered pursuant hereto, constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
15.5 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that prior to
Closing, neither party may assign its rights or delegate any of its duties and
obligations under this Agreement or the Ancillary Documents without the prior
written consent of the other; provided, further, that after the Closing, the
Company may not assign its rights or delegate any of its duties and obligations
under this Agreement and the Ancillary Documents without the prior written
consent of the holders of the Notes. Except as expressly provided herein,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person other than the parties hereto, and their respective successors
and permitted assigns, any rights, benefits, or remedies of any nature
whatsoever under or by reason of this Agreement.
15.6 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
15.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
15.8 Remedies Not Exclusive. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
The rights and remedies of any party based upon, arising out of, or otherwise in
respect of any inaccuracy in or breach of any representation, warranty,
covenant, or agreement contained in this Agreement shall in no way be limited by
the fact that the act, omission, occurrence, or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation,
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warranty, covenant, or agreement contained in this Agreement (or in any other
agreement between the parties) as to which
there is no inaccuracy or breach.
15.9 Further Assurances. From time to time following the Closing, at
the request of any party hereto and without further consideration, the other
party or parties hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
15.10 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same agreement. Each counterpart
may consist of a number of copies hereof each signed by less than all, but
together signed by all, the parties hereto.
15.11 Injunctive Relief. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under this Agreement or at law or in equity.
15.12 Consent to Jurisdiction. The parties hereto hereby irrevocably
submit to the jurisdiction of the courts of the State of Texas and the federal
courts of the United States of America located in Harris County, Texas, and
appropriate appellate courts therefrom, over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby, and
each party hereby irrevocably agrees that all claims in respect of such dispute
or proceeding shall be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by Applicable Law, any
objection which they may now or hereafter have to the laying of venue of any
dispute arising out of or relating to this Agreement or any of the transactions
contemplated hereby brought in such court or any defense of inconvenient forum
for the maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. This consent to
jurisdiction is being given solely for purposes of this Agreement and is not
intended to, and shall not, confer consent to jurisdiction with respect to any
other dispute in which a party to this Agreement may become involved.
15.13 Payments. All payments to be made hereunder shall be in lawful
money of the United States of America.
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: ENCAP INVESTMENTS L.C., General Partner
By:
---------------------------------------
Name:
-------------------------------
Title: Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By:
---------------------------------------
Name: Gary R. Petersen
Title: Director
ALLIANCE RESOURCES PLC
By:
---------------------------------------
Name:
-------------------------------
Title:
-------------------------------
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